TOKYO -- Toshiba Memory Holding will buy the solid state drive business of Taiwan's Lite-On Technology for $165 million, the chipmaker said Friday, looking to bolster operations with an eye on a possible stock market debut.
The acquisition is expected to close by the first half of 2020. Lite-On is a key buyer of Toshiba's NAND memory chips, which it uses to build the drives. It also produces parts for servers, computers and automobiles.
Toshiba controlled 17.6% of the global market for NAND memory in 2018, but its share for solid state drives was under 10%, according to IHS Markit. The company hopes to catch up with rivals like Samsung Electronics, which enjoys a share of more than 35% in both.
The global market for solid state drives totals about $30 billion. Despite flagging demand from data center servers, the market is expected to expand over the long term with the rise of artificial intelligence and 5G connections.
Toshiba Memory was spun off from the Toshiba group in June 2018 and is controlled by a coalition that includes Bain Capital. It aims to conduct an initial public offering by the end of the fiscal year in March.
The holding company logged a net loss of 95.2 billion yen ($896 million) for the April-June quarter.
"Solid state drives face less volatility in demand than NAND," which is a commodity product, one analyst said. Stronger solid state drive operations likely will help Toshiba Memory stabilize its earnings.
Lite-On's joint solid state drive venture with China's state-run Tsinghua Unigroup will not be part of the acquisition.